A total of 199 patients were enrolled in the clinical trial (see NCT02949388), which includes: a screening period of up to 4 weeks; a treatment period of 12 weeks; and a follow-up visit at 4 weeks, post-treatment. The randomized, double-blind, parallel-group and placebo-controlled study increased the total daily oral dosing of Prurisol from a previous high of 200 mg to include oral Prurisol 300 mg per day, oral Prurisol 400 mg per day, and placebo (3:1:3 randomization).

Primary efficacy is being evaluated using the Psoriasis Area and Severity Index (PASI), enabling a more direct comparison to already approved psoriasis drugs. In addition, multiple secondary endpoints will be studied to provide further insights into the potential benefits of Prurisol compared to marketed therapies, both oral and biologic.

In a previous Phase 2 trial studying Prurisol in mild-to-moderate psoriasis (see NCT02494479), Prurisol demonstrated early efficacy and was shown to be well-tolerated. A summary of these Phase 2 study results, presented at the 14th Annual Discovery on Target Conference, which was held on September 19, 2016, can be accessed at the link below.

"With all patients having received treatment, we look forward to wrapping up the Phase 2b Prurisol trial," commented Arthur P. Bertolino, MD, PhD, MBA, President and Chief Medical Officer at Innovation Pharmaceuticals. "Only a handful of patient follow-up visits remain to be completed. A novel psoriasis drug, particularly one that is oral, safe and effective, would be well-received by clinical practitioners and patients alike, both looking for newer treatment options to help manage this debilitating skin disease."

About PsoriasisAffecting an estimated 125 million people worldwide, psoriasis is a chronic immune-mediated skin disorder presenting with varying symptoms and levels of severity. The condition is characterized by raised and inflamed skin, often on the elbows, knees, scalp, hands and feet, causing itching, irritation, stinging and pain. Often feeling socially stigmatized, over 80 percent of people with psoriasis report it negatively impacts the quality of their everyday life. Cases are graded as Mild, Moderate and Severe depending upon extent of body surface area involved as well as other parameters. Up to 30 percent of psoriasis patients will eventually develop psoriatic arthritis (PsA). Psoriasis also is associated with numerous comorbidities. Despite recent advances, there remains a need for orally-delivered psoriasis drugs and other treatment alternatives to biologics, which can be accompanied by side effects that significantly impact activities of daily living, and may lose their effectiveness over time.

About PrurisolActing through immune modulation and PRINS reduction, Prurisol is a novel dermatology compound currently in mid-stage development as an oral psoriasis treatment utilizing the advantages of the FDA's 505(b)(2) development approach. This regulatory approach helps expedite a drug candidate's approval as it allows the FDA to rely, in part, on existing clinical data from an already approved drug, in this instance, Ziagen. In laboratory studies, Prurisol was found to be effective against psoriasis in animal models, both in induced psoriasis and in a xenograft model using human psoriatic tissue. In these models, Prurisol eliminated virtually all signs of psoriasis. Innovation Pharmaceuticals has successfully completed a Phase 2 clinical trial of Prurisol in patients with mild-to-moderate chronic plaque psoriasis. Overall analyses showed that the drug candidate appears to be safe, well-tolerated and efficacious in the highest dosing arm across 12 weeks of treatment. Patients with moderate psoriasis saw the greatest clinical improvements. An early dose-dependent response that improved as treatment duration increased was observed. Innovation Pharmaceuticals has initiated a Phase 2b clinical trial of Prurisol in moderate-to-severe psoriasis and will be assessing the drug candidate's efficacy at higher dosing regimens.

About 505(b)(2) Development ApproachUnder the FDA's 505(b)(2) development approach, a drug candidate's road to market approval can be significantly shortened and conducted at a much-reduced cost. Long-term safety data from a reference drug may be relied upon for approval, and potentially only one pivotal Phase 3 study, enrolling a smaller number of patients than is typical, may be required to establish drug efficacy. For more information about the FDA's 505(b)(2) development program, please visit: http://www.fda.gov/downloads/Drugs/…/Guidances/ucm079345.pdf

About the Company Headquartered in Beverly, Massachusetts, Innovation Pharmaceuticals Inc. (IPI), formerly Cellceutix Corporation, is publicly-traded under the company symbol "IPIX". The Company is a clinical stage biopharmaceutical company developing innovative therapies in multiple diseases. The Company believes it has a world-class portfolio of first-in-class lead drug candidates and is now advancing them toward market approval, while actively seeking strategic partnerships. The Company's Psoriasis drug candidate Prurisol completed a Phase 2 trial and a Phase 2b study is ongoing. Prurisol is a small molecule that acts through immune modulation and PRINS reduction. The Company's anti-cancer drug Kevetrin successfully concluded a Phase 1 clinical trial at Harvard Cancer Centers' Dana Farber Cancer Institute and Beth Israel Deaconess Medical Center, and the Company has commenced a Phase 2 study in Ovarian Cancer. In the laboratory, Kevetrin has been shown to modulate p53, often referred to as the "Guardian Angel Gene" due to its crucial role in controlling cell mutations. Brilacidin, a defensin mimetic compound, has shown in an animal model to reduce the occurrence of severe ulcerative Oral Mucositis (OM) by more than 94% compared to placebo. The Company recently completed a Phase 2 clinical trial with its novel compound Brilacidin-OM for the prevention of OM in patients with Head and Neck Cancer and data are being analyzed; interim results have shown a marked reduction in the incidence of severe OM (WHO Grade ≥ 3). The Company's lead antibiotic, Brilacidin, has completed a Phase 2b trial for Acute Bacterial Skin and Skin Structure Infection, or ABSSSI. Top-line data have shown a single dose of Brilacidin to deliver comparable clinical outcomes to the FDA-approved seven-day dosing regimen of daptomycin. Brilacidin has the potential to be a single-dose therapy for certain multi-drug resistant bacteria ("superbugs"). Topline results are now available for the Phase 2, open label Proof-of-Concept trial, treating patients with Brilacidin for Ulcerative Proctitis/Ulcerative Proctosigmoiditis (UP/UPS), two types of Inflammatory Bowel Disease (IBD). The Company has formed research collaborations with world-renowned research institutions in the United States and Europe, including MD Anderson Cancer Center, Beth Israel Deaconess Medical Center, and the University of Bologna. More information is available on the Company website at www.IPharmInc.com.

Forward-Looking Statements: This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 including statements concerning projected timelines for the initiation and completion of clinical trials, our future drug development plans, other statements regarding future product developments, including with respect to specific indications, and any other statements which are other than statements of historical fact. These statements involve risks, uncertainties and assumptions that could cause the Company's actual results and experience to differ materially from anticipated results and expectations expressed in these forward-looking statements. The Company has in some cases identified forward-looking statements by using words such as "anticipates," "believes," "hopes," "estimates," "looks," "expects," "plans," "intends," "goal," "potential," "may," "suggest," and similar expressions. Among other factors that could cause actual results to differ materially from those expressed in forward-looking statements are the Company's need for, and the availability of, substantial capital in the future to fund its operations and research and development; including the amount and timing of the sale of shares of common stock to Aspire Capital; the fact that the Company's compounds may not successfully complete pre-clinical or clinical testing, or be granted regulatory approval to be sold and marketed in the United States or elsewhere. A more complete description of these risk factors is included in the Company's filings with the Securities and Exchange Commission. You should not place undue reliance on any forward-looking statements. The Company undertakes no obligation to release publicly the results of any revisions to any such forward-looking statements that may be made to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events, except as required by applicable law or regulation.